Entry Strategy Essay Example
There are a number of market entry strategies that Uncle Tobys Oats can look upon depending upon the level of risks, legal obligations, advantages, disadvantages and returns and then make a strategic choice to enter the Hong Kong and USA markets. New market entry strategy may range from local offices, strategic alliances, joint venture, direct exporting, merger/acquisition, franchising, contracting and licensing depending upon the targeted market, competitors move, uniqueness, prior experience etc.
HONG KONG MARKET
Uncle Tobys Oats in order to make its presence felt in Hong Kong and United States of America shall look upon the following market entry modes to ensure higher success, lower risks and higher returns.
Uncle Tobys Oats should look towards a direct exporting market entry strategy for making its presence felt in Hong Kong. It is to be noted that Hong Kong is a free port that does not levy custom tariffs and is characterized with limited excise duties. Further a direct exporting marketing strategy to penetrate into the Hong Kong market also provides an added advantage to do business in Asia, especially in the mainland China. Research further shows that Hong Kong firms are more eager to work with serious exporters due to already strong commitment and market created by U.S. firms using metric measurements and meeting relevant standards (Czinkota & Ronkainen, 2004). In order to taste success in Hong Kong, Uncle Tobys Oats along with direct exporting its goods to Hong Kong should also towards hiring local agents as the same shall ensure marketing and distribution of the products with lesser efforts. It is to further noted that Hong Kong government allows subsidies and free import to many agro-based products. Imports in Hong Kong are expected to rise significantly by over 20% by 2015 as anticipated by National Export Initiative for Hong Kong. Further looking upon a direct exporting market entry strategy by Uncle Tobys Oats will facilitate the following advantages and risks for the company.
Potential profits are higher due to elimination of intermediaries.
Greater control and monitor over individual transactions.
Better protection of trademarks, copyrights and patents.
Brand recognition, as the customers know who you are and you know the market place in a better way with correct strategies to be developed to target the specific customers in a more logical manner (Webster, 2000)
Quick and reliable feedback from customers through local agents and distributors appointed by the company.
Entry via direct export strategy may take longer time than entry though indirect means.
Start up cost is higher with more marker research and greater need of highest reliable information.
Appointment of agents/distributors shall be a challenging task for the organization.
Thus we see that Uncle Tobys Oats through its direct export marketing strategy has its own advantages and risks involved. However a comparison of the same illustrates more returns, growth and advantages for the company and the company should go for direct export strategy due to much added advantages than risks involved in the same.
Uncle Tobys Oats in order to capture the American market and make its presence felt in the country can look a Joint Venture strategy to gain entry into the market. A joint venture strategy shall enable Uncle Tobys Oats towards a foreign direct investment which has limited restrictions in America when compared with other countries. Further entering into a joint venture with an established company in USA shall give added advantage of market presence, market knowledge, customer base, little government intervention and faster set up of a business (Cateora, Mary & Graham, 2009). Entering into a joint Venture with already existing company in USA shall enable Uncle Toybs Oats a developed networking and distribution system with a larger pool of loyal customers thus ensuring success and mitigating risk to a considerable extent. Number of joint ventures with already established organizations in United States has increased significantly during the past few years and the same in anticipated to increase by 23% in near future (Chrisan, 2001). Further American government has encouraged FDI in the country by relaxing taxation issues, allowing subsidies etc when entering into a joint venture with an American company.
Here is a list of advantages that Uncle Tobys Oats can look upon deciding its market entry strategy through a Joint Venture with an established company of USA.
Financial risk is mitigated to a considerable extent along with risk of exposure to political uncertainty.
Uncle Tobys Oats can set up its business at a faster pace along with new experience to learn about a completely new market with success.
Synergy and advantages of economies to scale can be achieved with lesser efforts and combining different value chains (Schutte and Ciarlante, 2008).
It helps in avoiding tariff barriers and satisfy local content requirements in a more logical and synchronized manner (Schutte and Ciarlante, 2008)
Risk of the project is spread over more than one firm and exit strategies are much easier with less losses and detriments to the organization (Schutte and Ciarlante, 2008)
It is to noted that, Joint Venture also has its owns risks and demerits like partners may have different opinion about a particular marketing strategy which may lead to conflicts among them or potential risk of a dynamic joint partner emerging as the strongest competitor to the firm. However, still entering into a Joint Venture with an established company of United States is most feasible in terms of financial creditability, environmental factors and government intervention.
Thus we see based on the current dynamic environmental scenario of both the countries along with physical viability of Uncle Tobys Oats to make its presence felt in two different markets with different characteristics and features. It is most viable to enter into a Direct Export market entry strategy when it comes to market expansion in Hong Kong and a Joint Venture entry strategy with an already established company of United States to make its presence felt in USA and ensure higher returns (Cook & Dave, 2004), viable expansion with future growth and sustainable development of the company in the longer run.
Cook, D. & Dave, D. 2004. Structural element of service quality product. International Journal of Business Performance Management, 6 (2), 189-207
Chrisan, P. 2001. Marketing: A Behavioral Analysis, McGraw – Hill. New York
Czinkota, M.R. & Ronkainen, I. A. 2004. International Marketing, 7th edn. South-WesternPublishing:Australia.
Cateora, P.R. & Mary, C. G. & Graham, J.L. 2009. International Marketing, 14th edn. Irwin: McGraw-Hill.
Schutte, H., and Ciarlante, D. 2008. Consumer Behaviour in Asia, London: MacMillan Business
Webster, F. 2000. Understanding the relationships among brands, consumers and resellers. Journal of the Academy of Marketing Science, 28(1): 17-23.
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